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Account Closed
  • Indian Trail, NC
5
Votes |
24
Posts

Getting home owner's insurance while rehabbing

Account Closed
  • Indian Trail, NC
Posted

Hi, we are excited to soon be closing on our first deal. We will be rehabbing a home that will probably take 2-3 months for the rehab. Is there an specific home owner's insurance policy for rehabs? the property is located in Concord NC. Does anybody have any recommendations? what is the average cost for insurance on a vacant home? Thank you!

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Roy N.
Pro Member
  • Rental Property Investor
  • Fredericton, New Brunswick
4,296
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7,658
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Roy N.
Pro Member
  • Rental Property Investor
  • Fredericton, New Brunswick
ModeratorReplied

Around here you cannot get a homeowner policy on a property you are not inhabiting.  You also cannot typically get a landlord policy on a vacant property.

That usually leaves you with a construction/builder risk policy (named perils coverage) which can be pricy (at least here).

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7
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1
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Austin Laney
  • Pearland, TX
1
Votes |
7
Posts
Austin Laney
  • Pearland, TX
Replied

Diego,

Not really sure on the cost of insurance in your area.  However, you will likely need to obtain a buildings risk policy.  This will allow you all your insurance needs while construction is in process.  Then you will have to switch to a homeowner/dwelling policy once repairs are made.  I would recommend getting with an independent agent in your area as they have the ability to search many different carrier for the right price/policy for your specific needs.

Good luck on the rehab!

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407
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214
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Stanley Parsley
  • Investor
  • Chandler, AZ
214
Votes |
407
Posts
Stanley Parsley
  • Investor
  • Chandler, AZ
Replied

talk to your current carrier

see if they can get you a binder for the construction/remodel of the property

you may need to contact a carrier that does commercial binding, this may be a little pricey but at least youll have coverage while your doing the work

enjoy

Account Closed
  • Indian Trail, NC
5
Votes |
24
Posts
Account Closed
  • Indian Trail, NC
Replied

thank you so much, I will contact my carrier. Have a great night!

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13
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8
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Dwight Rigel
  • Investor
  • Saint Louis, MO
8
Votes |
13
Posts
Dwight Rigel
  • Investor
  • Saint Louis, MO
Replied

There are two distinct differences in insurance policies while home is vacant and being rehabbed.  It is important to know which you should buy as one will typically not offer liability protection if you are acting as the GC and it's nice to have in case something were to happen. 

Typically the deciding factor is whether or not there will be structural work (moving load bearing walls, etc.).  The two options are Vacant and Builders Risk.  Vacant will typically be underwritten and accepted by carriers that offer vacant policies and include premises liability.  If it's kitchen updates and flooring you will get a better price and coverage by using this type of policy.  If on the other hand the carriers listen to your project and decide you only would qualify for a Builder's Risk policy then you will need to ask if they will provide liability based on your circumstance (are you using an insured GC other than yourself or will it be you doing the work.

Once you know which see if you can get a DP3 or Special Form rather than a DP1 or basic, if not shoot for DP2 or Broad Form.  The Special and Broad cover more types of losses and are typically a replacement cost basis rather than a depreciated settlement but make sure of that as that part can be endorsed on or off.

With all of that being said markets are different and appetites from carriers are different around the country.  Be sure you have a record (email) of what you told the agent or company so if a claim occurs you have proof that you were honest and forthright in your description of your project.

Good luck and have fun.

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183
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67
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Angel Dejesus
Pro Member
  • Property Manager
  • Boston, MA
67
Votes |
183
Posts
Angel Dejesus
Pro Member
  • Property Manager
  • Boston, MA
Replied

better make sure what your rehabbing is done in 3 month. If not you'll be paying the same amount as a 1 year insurance policy. This is something most agents or GC's won't tell you do to risk of not buying. Show pics of before and after once your done. Good luck and kick but

Account Closed
  • Indian Trail, NC
5
Votes |
24
Posts
Account Closed
  • Indian Trail, NC
Replied

Dwight, thank you for the great information, I really appreciate it. Thanks to all of you that responded, you have been very helpful.

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841
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480
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Ritch Bonisa
  • Specialist
  • Indianapolis, IN
480
Votes |
841
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Ritch Bonisa
  • Specialist
  • Indianapolis, IN
Replied

Independent agent, look at all options.  Have a brother-in-law that bought one cheap, put over 100K in it, wanted to cut costs, hired some scruffy subs, who he then had to throw off the job.  No insurance, finally days before he insured it and was a few weeks from moving in - it burned to the ground.  They think it was the ticked off subs.  

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87
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69
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Jon Pitcher
  • Property Manager
  • Oklahoma City, OK
69
Votes |
87
Posts
Jon Pitcher
  • Property Manager
  • Oklahoma City, OK
Replied

I have used REI Guard on 10+ flips. Formerly Affinity. They have policies specifically for rehab properties, and you can pay monthly. I never made a claim, so I can't speak to that process.

User Stats

461
Posts
262
Votes
Doug W.
  • Flipper/Rehabber
  • Alexandria, VA
262
Votes |
461
Posts
Doug W.
  • Flipper/Rehabber
  • Alexandria, VA
Replied

I also recommend REI Guard. I highly recommend them, actually.

User Stats

58
Posts
22
Votes
Rich Becker
Pro Member
  • Investor
  • Albany, NY
22
Votes |
58
Posts
Rich Becker
Pro Member
  • Investor
  • Albany, NY
Replied

Dwight Rigel I want to do a BRRRR and was seeing if it was possible with a conventional mortgage to purchase. The mortgage broker told me they would not lend if the house does not have a working Kitchen, baths, electric plumbing etc. In your opinion, if I wanted to do rehab like siding, floors, kitchen/bathroom updates, etc so no structure change at all, do you think I would qualify for this vacant policy and this policy would be an acceptable home owners insurance policy for my local credit union. Thanks!

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13
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8
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Dwight Rigel
  • Investor
  • Saint Louis, MO
8
Votes |
13
Posts
Dwight Rigel
  • Investor
  • Saint Louis, MO
Replied

in my market that would likely be acceptable though as the agent I would document that I spoke with the carrier's underwriter because there is a lot going on.   That being said New York is it's own world when it comes to insurance so you will need to call a few places.  

My suggestion would be to contact an independent agent or two and ask them. If and when you get the green light follow up by sending them the info on the property via email and review the scope in your email for documentation purposes. 

Best of luck!

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870
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345
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Frank S.
  • Specialist
  • Chicago, IL
345
Votes |
870
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Frank S.
  • Specialist
  • Chicago, IL
Replied

+1 REI Guard. Although, I haven't filed a claim through them.

User Stats

28
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15
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Antonio DeFlorio
  • Mio, MI
15
Votes |
28
Posts
Replied

Thanks to this site, I just got off the phone with REI Guard for a property I just closed. Prices were substantially lower and they were very helpful. They explained all the things regular agents seemed to be fuzzy on. Also found out I was substantially over insuring the property. The other agents had no problem insuring my limits, but would have never paid me out that high given I have so little into it. As a side note, BP has quite the reputation. As soon as I said I heard of REI Guard online they guessed BP.

User Stats

37
Posts
8
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Jeric L.
  • Investor
  • Rancho Cucamonga, CA
8
Votes |
37
Posts
Jeric L.
  • Investor
  • Rancho Cucamonga, CA
Replied
Originally posted by @Dwight Rigel:

There are two distinct differences in insurance policies while home is vacant and being rehabbed.  It is important to know which you should buy as one will typically not offer liability protection if you are acting as the GC and it's nice to have in case something were to happen. 

Typically the deciding factor is whether or not there will be structural work (moving load bearing walls, etc.).  The two options are Vacant and Builders Risk.  Vacant will typically be underwritten and accepted by carriers that offer vacant policies and include premises liability.  If it's kitchen updates and flooring you will get a better price and coverage by using this type of policy.  If on the other hand the carriers listen to your project and decide you only would qualify for a Builder's Risk policy then you will need to ask if they will provide liability based on your circumstance (are you using an insured GC other than yourself or will it be you doing the work.

Once you know which see if you can get a DP3 or Special Form rather than a DP1 or basic, if not shoot for DP2 or Broad Form.  The Special and Broad cover more types of losses and are typically a replacement cost basis rather than a depreciated settlement but make sure of that as that part can be endorsed on or off.

With all of that being said markets are different and appetites from carriers are different around the country.  Be sure you have a record (email) of what you told the agent or company so if a claim occurs you have proof that you were honest and forthright in your description of your project.

Good luck and have fun.

 Great insights on property insurance, very helpful! Thank you @Dwight Rigel!

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3,034
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2,018
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Brian Garrett
  • Real Estate Investor
  • Palm Beach County, FL
2,018
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3,034
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Brian Garrett
  • Real Estate Investor
  • Palm Beach County, FL
Replied

Very good to know about REI Guard. Now I plan on giving them a call as well.